Digital News Report – Today, Governor Arnold Schwarzenegger delivered his annual State of the State address before a joint session of the California legislature. The Governor reflected on the teamwork that brought California through the worst recession since the Great Depression in 2009 and laid out his vision for California in 2010.

“This coming year can be summarized in one word: priorities. As we face another round of fiscal challenges, we must get our priorities straight and keep them straight. Creating jobs and getting our economy back on track, protecting education, reforming our tax and pension systems and putting an end to our boom and bust budget cycle must all be priorities,” said Governor Schwarzenegger. “I know that if we can recreate the teamwork we built last year and focus together on these priorities, California, already seeing clear signs of recovery, will emerge from these difficult times stronger and more vibrant that ever.”

In his speech, the Governor announced two new California initiatives: the California Jobs Initiative, designed to create jobs and ensure California is a better partner to the economy, and Operation Welcome Home, a program to ensure returning veterans are provided access to the services and opportunities they deserve. In addition, the Governor announced a historic shift in California’s priorities by proposing a constitutional amendment to ensure that the state never again spends a greater percentage of funds on prisons than on higher education.

The Governor also continued to push the priorities he has been advocating for years, including fighting for California’s fair share of federal funding, tackling tax and pension reform and reducing prison costs. The Governor went into detail on each priority and provided specific proposals, which include:

Constitutional Amendment to Increase Higher Education Funding

While this budget year will pose many challenges, the Governor drew the line at education and called for a historic realignment of California’s priorities. He announced that he would work to protect California’s schools and to shield higher education from further cuts. The Governor called on the legislature to help him make California’s education system a higher priority than prisons. Specifically, he proposed:

A constitutional amendment to ensure California cannot spend a greater percentage of General Fund (GF) dollars on its prisons than on higher education.

Under the Governor’s initiative, no less than ten percent of GF dollars would be allocated to fund public institutions of higher education and no more than seven percent would be allocated to support the state prison system. These mandatory limits would begin in the 2014-15 fiscal year.

The Governor announced that the amendment will include a provision that allows the California Department of Corrections and Rehabilitation the authority to contract with private entities – while retaining all authority – to build or operate prisons and manage or transfer inmates. This would save the state billions of dollars per year.

Jobs and Economic Growth

The Governor made it clear that his number one priority in 2010 is fostering a business-friendly economy and creating jobs. In his speech, he outlined measures he will present to the legislature to achieve that priority including:

The California Jobs Initiative, a program to pump jobs into California by creating or retaining up to 100,000 jobs and providing training to 140,000 individuals to enable them to retain their current positions or compete for higher paying jobs.

A measure to streamline the permitting of construction projects that already have a completed environmental impact report.

A proposal to extend and expand the $10,000 homebuyer tax credit to include the purchase of existing homes in addition to new residences for first-time homebuyers.

A proposal to eliminate frivolous lawsuits that punish California’s small businesses.

Budget and Tax Reform

For years, Governor Schwarzenegger has been calling for structural reforms in how California budgets and spends its money, and this year is no exception. In 2009, California’s economic growth declined 2.8 percent, but our tax revenues were down more than 8 times that much – reinforcing the fact that our budget woes are self-inflicted wounds.

The Governor called on the legislature to work with him to fix California’s broken tax system and take up the bold reforms proposed by the bipartisan Commission on the 21st Century. Restructuring our tax system will help ensure California has a stable, reliable revenue stream to fund the state’s vital programs and services.

Pension Reform

In 1999, the legislature boosted lifetime pensions for government employees without setting aside enough money to pay for them. Now annual pension costs are up over 2,000 percent just in the last ten years and will keep on growing and crowding out other programs unless we take action. Every dollar needed to meet underfunded pension promises is a dollar taken from higher education, environmental protection, parks and recreation and other important programs. To protect programs and taxpayers, the Governor called on the legislature to make pension reform a priority this year and to pass legislation reducing pension burdens going forward.

Federal Funds

The Governor is committed to building a more fair and equitable financial relationship with the federal government. California must be reimbursed for overspending mandated by federal regulations and relieved of the costly burdens placed on our programs that restrict us from living within our means.
The Governor will fight for a permanent shift in the monetary relationship between California and the federal government.

Being a border state, California has a heavier financial burden when it comes to security, but the federal government is not sharing that burden fairly. The Governor will fight to restructure this inequitable funding arrangement.

While the Governor has always been a strong supporter of health care reform, the legislation currently being debated in Congress will pile billions of dollars in additional costs on California. The Governor followed up his December 22, 2009 letter to Speaker of the House Nancy Pelosi and members of the California Congressional Delegation by calling on them to either vote against the current legislation or fight for a more equitable deal for California.

Operation Welcome Home

California has more returning veterans than any other state and the Governor committed to making these brave men and women a priority. Operation Welcome Home will put 300 recent veterans to work identifying and making direct contact with the 30,000 heroes returning to California annually to counsel them about benefits and transitional workforce training available to help them enter the workforce and transition successfully from the battle front to the home front. Specifically, Operation Welcome Home:
Establishes nine regional full-time teams that will assist veterans in finding employment and job training, educational opportunities, housing, mental and physical health care, federal benefits and support for their families.

Launches the California Veteran Corps, a volunteer network to reinforce the efforts of the full-time regional teams.